In a statement, the Bank of England said: “As a temporary measure, this will provide a short-term source of additional liquidity to the Government if needed to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from Covid-19.

“The Government will continue to use the markets as its primary source of financing, and its response to Covid-19 will be fully funded by additional borrowing through normal debt management operations.”

Downing Street said the Bank of England’s temporary extension of the use of Ways & Means is to smooth Government cash flows.

The Prime Minister’s official spokesman said: “The Bank of England will temporarily extend use of the Government’s long-standing ways and means facility to help Government cash flows and provide a temporary short-term source of additional funding.”

Pressed if the Government was running out of money, he said: “The Government will be raising the finance through the debt markets and continues to use the markets as a source of financing.

“For example, there have been four debt auctions this week and they all have been successful.”

Fran Boait, executive director of Positive Money, said: “It is welcome that the Bank of England is using its power to create money to directly finance Government spending, after denying that such a tool was on the table.

“Direct monetary financing allows the Government to deliver the necessary spending to save lives, while reassuring the public that they will not be overburdened with future debt repayments.

“It also ensures that the Treasury has access to funding even if Government debt markets are disrupted, as we have seen signs of during the coronavirus crisis.”